It's not difficult to find companies that have recently performed poorly on the market. After all, equities are experiencing a downturn, and the S&P 500 is in a full-blown bear market (defined as a 20% or more drop from its most recent highs). History suggests that stocks will eventually recover; bull markets always follow bear markets.

That's why now is a great time to invest in stocks. But which companies should you pick? Let's look at one biotech stock worth consideration: BioXcel Therapeutics (BTAI -8.75%). This small-cap company looks risky, but the payoff could be huge for inventors comfortable with the volatility. 

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A new product with commercial opportunity

In April, the U.S. Food and Drug Administration (FDA) approved BioXcel Therapeutics' Igalmi, a sublingual thin film for treating acute agitation in patients with schizophrenia and bipolar disorder. Acute agitation refers to behavioral symptoms -- including intense activity -- that patients sometimes experience. 

One could be inclined to dismiss BioXcel Therapeutics immediately because it only has one approved product. However, it is not unheard of for smaller biotechs to become highly successful thanks to just one innovative therapy. Of course, whether BioXcel can join this group will depend on various factors, including Igalmi's commercial opportunity. 

Roughly 7.3 million patients in the U.S. are diagnosed with schizophrenia or bipolar disorder, up to 25% of whom experience agitation. The number of agitation episodes for patients can range between 10 and 17 annually, and the total number of cases is estimated at up to 25 million per year.

The current standards of treatment often bear significant drawbacks. These include anti-psychotic drugs, which come with the side effect of sedation -- and the risk of oversedation. Therefore, Igalmi could become important for physicians and other healthcare professionals, as it provides a new option to control the millions of agitation episodes in those with schizophrenia and bipolar disorder every year. 

A high-risk, high-reward play

BioXcel Therapeutics has yet to record any revenue from Igalmi since it launched the medicine in the second quarter. It will be interesting to watch how much in sales the therapy generates in the coming periods. However, BioXcel's current market cap is only $500 million. In my view, Igalmi is almost certainly worth more than that, which makes BioXcel somewhat attractive. 

That's especially the case considering the company's pipeline. BioXcel is looking to earn label expansions for Igalmi as a potential treatment for agitation associated with Alzheimer's disease (AD). There are more than 6 million AD patients in the U.S., a number that is projected to continue growing. Earning approval in AD patients would notably improve Igalmi's prospects.

The company boasts about a handful of other programs as well. Naturally, investors should be cautious of the risks the company faces. Biotech companies can always run into clinical or regulatory headwinds. Small-cap drugmakers that generate little revenue are especially at risk -- BioXcel Therapeutics' shares will likely plunge if its ongoing phase 3 clinical trial for Igalmi in AD patients flops.

The commercial launch of BioXcel's crown jewel could run into obstacles, too, or the medicine's opportunity may not turn out to be exciting at all. There are undoubtedly solid reasons to be skeptical of this stock. But if everything does go according to plan, shareholders could be handsomely rewarded.

The company ended the first quarter with $200 million in cash and cash equivalents. It initiated a $260 million strategic financing initiative that will help support the launch of Igalmi and extend its cash runway to 2025, according to management. That, in addition to the sales the medicine will eventually rack up, would take care of BioXcel's funding needs, at least for a while, and perhaps long enough for the biotech to earn additional approvals. 

In short, significant risks remain with this biotech, but given its low market cap and the value of its pipeline, it also boasts plenty of upside potential.